PC Owners More Likely to Start Businesses

June 29, 2005--People with home computers are more likely to start companies in finance, insurance, real estate (F.I.R.E.), and other professional services, and less likely to initiate agriculture, mining, and construction businesses, reported a study released last Thursday by the Small Business Administration Office of Advocacy.

The study compared the percentages of men and women with and without prior access to home computers who started businesses between 1997 and 2001. Overall, findings suggest that business starts were more prevalent by male and female computer owners than non-computer owners; however, interestingly, those computer owners who started businesses didn't do so in the IT field. Only 5.9% of male computer owners who started businesses during the time period and less than 2% of female computer owners founded computer and data processing-related businesses.

Such results were unexpected, according to Dr. Chad Moutray, chief economist of the Office of Advocacy. "The conventional wisdom is that such individuals would go into the IT field. Instead, they have entered whole hosts of different areas and very few actually go into the computer industry," he said.

One category of companies favored by many of the computer owners was the F.I.R.E. category. The study found that 9.8% of men and 10.8% of the women with prior access to computers started F.I.R.E. type companies from 1997 to 2001, compared to 1.8% and 4.9%, respectively, without prior access.

Additionally, industries favored by computer owners were similar to those requiring high investment in technology, said the study, which pointed out that capital expenditure per employee in 1998 was $2,639 in F.I.R.E.-related businesses, compared to $151 in construction. It suggested that owning a computer gave an individual certain skills in using spreadsheets, word processors or databases that were valuable across several industries.

The study also found that having access to a home computer slightly increased the probabilities of men or women starting a business, with the relationship between access to home computers and entrepreneurship being much stronger for women.

Claiming to be the first effort to ask whether owning a personal computer made it more likely for someone to become an entrepreneur, the study, entitled "Technology and Entrepreneurship: A Cross-Industry Analysis of Access to Computers and Self-Employment," was authored by Dr. Robert Fairlie, who teaches entrepreneurship at the University of California, Santa Cruz, and commissioned by the SBA Office of Advocacy.